Outgoing president says Iraq war has been tougher than expected, but U.S. couldn't let Saddam bully region.

U.S. President George W. Bush reiterated his pledge that the United States will not allow Iran to develop nuclear weapons in a wide-ranging speech on the Middle East Friday.

"For the safety of our people and the peace of the world, America will not allow Iran to develop a nuclear weapon," Bush said at the Saban Center for Middle East Policy at the Brookings Institution.

Bush called the Israeli-Palestinian conflict the most vexing problem in the region, but offered a hopeful tone, saying "on the most vexing problem in the region - the Israeli- Palestinian conflict - there is now greater international consensus than at any point in recent memory."

He noted that he was the first U.S. president to call for a Palestinian state and said he sees progress toward reaching a two-state solution.

The Israelis and Palestinians agreed last November at a meeting in Annapolis, Maryland, to reach some agreement by the end of the year. But after months of publicly insisting that an agreement could still be forged, the Bush administration has conceded that it will hand the fragile, unfinished U.S.-backed peace effort to Obama.

Bush offered a defense of the Iraq War, suggesting the U.S. invasion of Iraq to topple Saddam Hussein prompted Iran to slow its nuclear ambitions, only to resume them after the election of President Mahmoud Ahmadinejad in 2006.

"The defeat of Saddam also appears to have changed the calculation of Iran," Bush said.

U.S. intelligence officials in a report released in December 2007 said Iran halted its nuclear weapons program in 2003 but was still seeking the capability to develop the weapons. Iran has continued to enrich uranium in defiance of UN Security Council resolutions.

The United States and its European partners have offered Iran diplomatic and economic incentives to suspend uranium enrichment. Iran maintains it has the right to continue and that it is merely for civilian reactors.

Bush also said following the September 11, 2001 attacks, the United States could not allow Saddam to bully the region and rebuff Security Council demands to surrender weapons of mass destruction.

"In a world where terrorists armed with box cutters had just killed 3,000 people, America had to decide whether we could tolerate a sworn enemy that acted belligerently, that supported terror, and that intelligence agencies around the world believed had weapons of mass destruction," he said.

Weapons were never found, and Bush conceded in November that the failure of the intelligence community on Saddam's alleged weapons was the "biggest regret" of his presidency.

In his speech, Bush proclaimed that the Mideast was a freer, more hopeful place today than it was when he took office in 2001. He cited examples: The Lebanese are free from Syria's military occupation; Libya's nuclear weapons equipment is lockedaway in Oak Ridge, Tennessee; United Arab Emirates and Bahrain are emerging as centers of commerce; Iran is facing greater pressure from the international community than ever before; and the threat from terrorist organizations like al-Qaida has been curtailed.

Administration critics say Bush's view of the region is rosier than reality.

"If you look down the challenges that President Obama will face, he will have to restart the Israeli-Palestinian peace process almost from the ground up," said Anthony Cordesman, a former Pentagon analyst now at the Center for Strategic and International Studies in Washington.

"He will be dealing with an unstable Iraq, subject to growing Iranian influence, and an al-Qaida, which has been sharply weakened, but not defeated."

"I can't think of a public opinion poll that does not show a sharp deterioration in the U.S. position in the Middle East, Cordesman said, characterizing Bush's remarks as an attempt at spinning a foreign policy legacy from Hell."

More than 180 people attended Bush's speech, including Secretary of State Condoleezza Rice; Zalmay Khalilzad, U.S. ambassador to the United Nations; and members of Congress.

Mofaz: A nuclear Iran is not an option

Transportation Minister and Kadima MK Shaul Mofaz also gave a speech at the Saban Center Friday, where he said a nuclear Iran is not an option and Israel won't allow a second Holocaust.

Mofaz added that the world must pose additional sanctions and "leave all options on the table" in dealing with the Islamic Republic's nuclear weapons program.

In regard to the Hamas, Mofaz said that Israel "is ready to speak with Hamas if they implement Quartet requirements" but that Israel cannot allow "Hamas to threaten Israeli civilians from Gaza.

Mofaz also addressed talks with Syria, saying "it's important to negotiate with Syria, without any preconditions," but that "Syria has to decide if it's a part of the problem or a part of the solution."

Mofaz praised Barack Obama saying he has "no doubt that the President-Elect Barack Obama will face the challenges with courage and determination, and that we're moving towards a better future."

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